Unilever's slow sales disappoint

FIRST-quarter results from Unilever fell short of City expectations today, with outgoing chairman Niall FitzGerald 'not happy' with sales at the household products giant.

Hit by increased competition and the impact of consumer-related price promotions, sales fell 2% to e9.79bn (£6.5bn) in the first three months of the year.

Profit before exceptionals, interest and amortisation was up 7% at e851m, but fell short of many City forecasts.

FitzGerald, who leaves in September to become chairman of Reuters, said sales of the Anglo-Dutch group's leading brands had advanced 1.3%, with flat pricing. But margins surged, despite the increased promotional activity.

Tough trading conditions continued throughout the quarter and, while there have been 'clear signs' of improving economic activity, competition is increasing in some of the group's key markets.

FitzGerald said Unilever's strategy was designed to deliver 'robust long-term value growth'. But he added: 'We are not happy with the short-term sales performance and action is being taken to address this.'

The 1.3% sales rise in the group's top 400 brands was judged particularly disappointing. The group has concentrated its resources on these items, including Dove soap, Sunsilk shampoo, Hellmann's mayonnaise and Knorr foods.

Earlier this year, Unilever ditched its five-year target of 5%-6% sales growth from such brands.